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EDITORIAL - Show us the tax net
Published: Tuesday | October 27, 2009
Some months ago, Prime Minister Bruce Golding offered Jamaicans a bit of information - which was hardly surprising - implications of which are clearly deleterious to the ability of the Government to manage its affairs.
The tax authorities, Mr Golding reported, had recently randomly gone through a public listing of doctors and matched their names against people on the tax roll. Fewer than a handful turned up.
This was hardly surprising. Tax evasion is something of a national pastime in Jamaica. Indeed, in the debate for the 2008-2009 Budget, the first presented by his Jamaica Labour Party (JLP) in 18 years, Mr Golding offered some dramatic data to highlight this fact.
Outside of the people from whom income tax is deducted at source - the pay-as-you-earn (PAYE) workers - only 4,000 Jamaicans were on the tax roll. Yet, by government estimates, upwards of 250,000 should have been paying income taxes.
Mr Golding also estimated that on average, only five per cent of the value of imports was being collected in customs duties, and one per cent of registered companies paid 75 per cent of corporate taxes. Additionally, 80 per cent of the company taxes and 50 per cent of the property taxes were not being collected.
'Relief, waivers and concoctions'
And of the few taxes, 60 per cent is clawed back in the form of "relief, waivers and concoctions".
"Our tax system is inequitable, inefficient and leaky," the prime minister declared.
The difference with Mr Golding's presentation, as opposed to previous statements about the predilection of Jamaicans for tax evasion, was the vehemence with which the PM and his finance minister, Mr Audley Shaw, promised to do something about it.
Mr Shaw soon announced a shake-up in the tax-administration system, with the replacement of some of the collection/compliance bosses. He also announced a tax amnesty and bragged heartily about its efficacy in inducing compliance. For all this, we congratulate the Government and Mr Shaw. Except that our encomiums are, in the absence of hard data, based merely on ministerial declarations. In other words, neither Mr Shaw nor the tax authorities have, to date, offered any specific information on enhanced compliance and how this is affecting the Government's finances.
A good performance
For example, in the first five months of this fiscal year, the Government collected $23.6 billion in PAYE taxes, which is approximately one per cent below the projected amount. That, on the face of it, is a good performance, given the soft economy and the thousands of jobs that have been shed this year.
What is not clear, however, is whether the outcome is indicative of people who previously evaded taxes are now being caught in the net and, if so, how many, and their actual and projected contribution.
Indeed, similar questions apply to, say, international trade where the tax return in 2009-2010 was projected at approximately $89 billion, with $32.27 billion coming in the first five months. The performance, though, is 12 per cent below target.
This, we suspect, is partly because of the economic downturn. But we believe that the authorities need to provide specific information about efforts to close loopholes if it expects strong support for the tough fiscal measures that are inevitable in the current environment.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
http://www.jamaica-gleaner.com/glean...cleisure1.html
Published: Tuesday | October 27, 2009
Some months ago, Prime Minister Bruce Golding offered Jamaicans a bit of information - which was hardly surprising - implications of which are clearly deleterious to the ability of the Government to manage its affairs.
The tax authorities, Mr Golding reported, had recently randomly gone through a public listing of doctors and matched their names against people on the tax roll. Fewer than a handful turned up.
This was hardly surprising. Tax evasion is something of a national pastime in Jamaica. Indeed, in the debate for the 2008-2009 Budget, the first presented by his Jamaica Labour Party (JLP) in 18 years, Mr Golding offered some dramatic data to highlight this fact.
Outside of the people from whom income tax is deducted at source - the pay-as-you-earn (PAYE) workers - only 4,000 Jamaicans were on the tax roll. Yet, by government estimates, upwards of 250,000 should have been paying income taxes.
Mr Golding also estimated that on average, only five per cent of the value of imports was being collected in customs duties, and one per cent of registered companies paid 75 per cent of corporate taxes. Additionally, 80 per cent of the company taxes and 50 per cent of the property taxes were not being collected.
'Relief, waivers and concoctions'
And of the few taxes, 60 per cent is clawed back in the form of "relief, waivers and concoctions".
"Our tax system is inequitable, inefficient and leaky," the prime minister declared.
The difference with Mr Golding's presentation, as opposed to previous statements about the predilection of Jamaicans for tax evasion, was the vehemence with which the PM and his finance minister, Mr Audley Shaw, promised to do something about it.
Mr Shaw soon announced a shake-up in the tax-administration system, with the replacement of some of the collection/compliance bosses. He also announced a tax amnesty and bragged heartily about its efficacy in inducing compliance. For all this, we congratulate the Government and Mr Shaw. Except that our encomiums are, in the absence of hard data, based merely on ministerial declarations. In other words, neither Mr Shaw nor the tax authorities have, to date, offered any specific information on enhanced compliance and how this is affecting the Government's finances.
A good performance
For example, in the first five months of this fiscal year, the Government collected $23.6 billion in PAYE taxes, which is approximately one per cent below the projected amount. That, on the face of it, is a good performance, given the soft economy and the thousands of jobs that have been shed this year.
What is not clear, however, is whether the outcome is indicative of people who previously evaded taxes are now being caught in the net and, if so, how many, and their actual and projected contribution.
Indeed, similar questions apply to, say, international trade where the tax return in 2009-2010 was projected at approximately $89 billion, with $32.27 billion coming in the first five months. The performance, though, is 12 per cent below target.
This, we suspect, is partly because of the economic downturn. But we believe that the authorities need to provide specific information about efforts to close loopholes if it expects strong support for the tough fiscal measures that are inevitable in the current environment.
The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
http://www.jamaica-gleaner.com/glean...cleisure1.html
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